Zermatt Investors: Zermatt Research Gold & Silver October 2016

1. Gold & Silver Risk Notes
October 2016

2. LONDON, Sept 12 Gold fell on Monday as pressure from speculation over a potential increase in U.S. interest rates this month offset the
metal's safe-haven appeal amid widespread weakness across other assets. Spot gold was down almost 0.3 percent at $1,324.15 an ounce by
1400 GMT, with U.S. gold futures losing 0.5 percent to $1,328. A chorus of hawkish comments from Federal Reserve officials kept
expectations alive for a September rate increase despite a recent spate of disappointing economic data. - RTRS
If it were not for Brexit, arguments could be made against the actual price of Gold.
As for Oct. 5th 10am that price is $1275.80 and silver is at $17.9250
From a variability perspective, gold is a a very poor inflation hedge
By definition the nominal return of gold is the sum of the inflation rate and the real gold price return

3. “Over practical investment horizons, gold is an unreliable
inflation hedge” - NBER 2013
The current Gold/ Silver Ratio is $67.887 (3:44PM EST 9/05/16)
In an NBER working paper from 2013, the correlation between treasury prices and the price of gold is striking and delivered with haunting
words:
If prominent emerging markets increase their gold holdings to average per capita or per GDP holdings of developed countries, the real price
of gold may rise even further from today’s elevated levels. In the end, investors face a golden dilemma:
1) embrace a view that ‘those who cannot remember the past are condemned to repeat it’ and the purchasing power of gold is likely to revert
to its mean or
2) embrace a view that the emergence of new markets represent a structural change and ‘this time is different’.

4. Gold to Silver Ratio Charts (Macrotrends)
99 Years 5 Years

11. Source Data:
-Shanghai Futures Exchange
-IMF
-NBER Working Paper 18706
-MacroTrends
-Zermatt Investors Data

12. © ZermattResearch.com, a trademark of Zermatt Investors.
Report August - October 4, 2016
Zermatt Investors Corp. (USA)
Zermatt Credit Ltd. (London)
www.zermattresearch.com